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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Downing Abs.2 | LSE:DA2O | London | Ordinary Share | GB00B4K0JB10 | ORD 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 64.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMDA2O Downing Absolute Income VCT 2 plc Half-Yearly Report for the six months ended 30 September 2012 PERFORMANCE SUMMARY 30 Sept 31 Mar 30 Sept 2012 2012 2011 pence pence pence Net asset value per Ordinary Share and 'A' Share 69.8 72.3 85.0 Cumulative distributions per Ordinary Share 12.5 10.0 7.5 ------------------------------ Total return per Ordinary Share and 'A' Share 82.3 82.3 92.5 ------------------------------ CHAIRMAN'S STATEMENT I present the Company's Half-Yearly Report for the period ended 30 September 2012. Following the very disappointing results I had to report at the last year end, the last six months has seen a stable performance. Difficulties with the problem investments are not yet fully resolved but there has been some positive news from some portfolio companies. Venture capital investments The Company now has in excess of 70% of its funds invested in VCT qualifying investments. As a result, investment activity over the period has been limited to one new investment and some small follow-on investments. A GBP200,000 non-qualifying investment was made in Baron House LLP. The partnership is developing a Hampton by Hilton hotel in central Newcastle. The investment will pay an ongoing yield and will also pay a share of the final development profit. The other sizeable addition arose from further investments in Helcim, where a total of GBP235,000 of was invested over the period. This company has faced major difficulties and required several further injections of funds in order to ensure that it could continue trading, while all possible options for the future of the business were explored. Ultimately, the best outcome that could be achieved was a sale of the business for deferred consideration equivalent to GBP211,000 paid over the next three years plus an additional sum based on profits. At the period end, the investment has been valued at GBP211,000. The other major investment transaction involved the reorganisation of the Liverpool Nurseries companies, such that they are now all held under one holding company. In respect of disposals, there were a small number of loan stock redemptions. A small number of adjustments were made to the unquoted investment valuations at the period end. Tramps Nightclub and Alpha Schools were increased by GBP60,000 and GBP12,000 following steady progress by both companies. As described above, the investment in Helcim was written down to the minimum expected deferred consideration from the sale, being an additional provision of GBP235,000. Camandale, the company which owns a pub and nightclub in Kilmarnock, has also been written down by GBP90,000, such that both venues are now valued at a third party "bricks and mortar" valuation. Rostima was also written down by GBP170,000 in the period. The company, which mainly provides software systems to shipping ports, has struggled to transform its order pipeline into firm contracts and has required further working capital since the period end. A provision has been made equivalent to the equity element of our investment. The share price of Tracsis plc, one of the companies AIM-quoted holdings, performed very strongly over the period, producing a rise of GBP221,000 in the investment value. Part of the holding was also sold, generating realised gains of GBP32,000 in the period. Accumuli, the other AIM-quoted holding, saw a small fall of GBP19,000. Overall, the investment portfolio showed a net unrealised loss of GBP221,000 and net realised gains in the year of GBP32,000. The portfolio also generated investment income of GBP365,000 over the period. In view of the ongoing difficulties with a small number of investments which have resulted in losses, as a goodwill gesture, Downing LLP, the manager, has again offered to waive its investment and administration fees for the period. These total GBP164,000 and this offer has been accepted by the Board. Net asset value and results At 30 September 2012, the net asset value ("NAV") per Ordinary Share stood at 69.7p and the NAV per 'A' Share stood at 0.1p, producing a combined total of 69.8p. This is unchanged since the year end of 31 March 2012 (after adjusting for the 2.5p dividend paid during the period). Total return (NAV plus dividends to date) was 82.3p at 30 September 2012, compared to an initial cost to original subscribers (net of income tax relief) of 70p. The profit on ordinary activities after taxation for the period was GBP8,000, comprising a profit of GBP197,000 on the revenue account and a loss of GBP189,000 on the capital account. Dividends As set out in the Company's prospectus, the Board intends to pay dividends of 5.0p per annum. Despite the losses suffered to date, the Company still has sufficient distributable reserves and cash resources to be able to continue to pay such a dividend. The Board therefore intends to continue with this policy, but will monitor cash resources to ensure that the Company continues to hold sufficient cash to ensure that it would be able to support existing investee companies in the event that they require further funding. The next dividend of 2.5p per Ordinary Share will be paid on 28 March 2013 to Ordinary Shareholders on the register at 1 March 2013. Share buybacks The Company operates a share buyback policy whereby, subject to certain restrictions, it intends to buy in any of its own shares that become available in the market for cancellation. In its initial years, the Company will normally seek to undertake any buybacks at a price equal to the latest published NAV (i.e. at a nil discount). During the period, the Company purchased 29,950 Ordinary Shares and 20,775 'A' Shares at an average price of 72.0p and 0.001p per share respectively. Outlook I believe that the major difficulties faced by a number of investee companies have been properly addressed and, in most cases, the businesses have now been stabilised. Unfortunately, a significant amount of value has been lost and there are no prospects for a quick recovery of the ground that has been lost. The investment portfolio does include a number of investments which have reasonable prospects for building value over the medium-term, however, as with many businesses in the current climate, the portfolio is not without risk. The Board will continue to work closely with the Manager to ensure a high level of monitoring of the portfolio companies is maintained and support given when appropriate. Chad Murrin Chairman UNAUDITED SUMMARISED BALANCE SHEET as at 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 Total Total Total GBP'000 GBP'000 GBP'000 Fixed assets Investments 13,730 14,640 13,591 Current assets Debtors 136 284 482 Cash at bank and in hand 282 2,369 556 --------- --------- -------- 418 2,653 1,038 Creditors: amounts falling due within one year (249) (310) (222) --------- --------- -------- Net current assets 169 2,343 816 --------- --------- -------- Net assets 13,899 16,983 14,407 --------- --------- -------- Capital and reserves Called up share capital 20 20 20 Share premium 30 30 30 Special reserve 16,741 17,591 17,204 Revaluation reserve (3,161) (793) (2,964) Capital reserve - realised 54 18 - Revenue reserve 215 117 117 --------- --------- -------- Equity shareholders' funds 13,899 16,983 14,407 --------- --------- -------- Net asset value per Ordinary Share 69.7p 84.9p 72.2p Net asset value per 'A' Share 0.1p 0.1p 0.1p UNAUDITED INCOME STATEMENT for the six months ended 30 September 2012 Period Period ended ended 30 Sept 2012 Period ended 31 Mar 30 Sept 2011 2012 Revenue Capital Total Revenue Capital Total Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 365 - 365 419 - 419 669 Gains/(losses) on investments - realised - 32 32 - 18 18 (3,041) - unrealised - (221) (221) - (870) (870) (132) ----------------------- ------------------------ ---------- 365 (189) 176 419 (852) (433) (2,504) Investment management - - - (82) (82) (164) - fees Other expenses (95) - (95) (136) - (136) (191) ----------------------- ------------------------ ---------- Return/(loss) on ordinary activities before taxation 270 (189) 81 201 (934) (733) (2,695) Taxation (73) - (73) (35) - (35) (113) ----------------------- ------------------------ ---------- Return/(loss) attributable to equity shareholders 197 (189) 8 166 (934) (768) (2,808) ----------------------- ------------------------ ---------- Return per Ordinary 1.0p (1.0p) 0.0p 0.8p (4.7p) (3.9p) (14.1p) Share Return per 'A' Share - - - - - - - A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement as noted above. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months ended 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 GBP'000 GBP'000 GBP'000 Opening Shareholders' funds 14,407 18,266 18,266 Dividends paid (498) (500) (997) Purchase of own shares (18) (15) (54) Total recognised gain/(loss) for the period 8 (768) (2,808) --------- --------- -------- Closing Shareholders' funds 13,899 16,983 14,407 --------- --------- -------- UNAUDITED CASH FLOW STATEMENT for the six months ended 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 Note GBP'000 GBP'000 GBP'000 Cash inflow from operating activities and returns on investments 1 570 1,074 1,070 --------- --------- -------- Taxation Corporation tax paid - (110) (111) Capital expenditure Purchase of investments (844) (3,294) (8,844) Sale of investments 517 3,189 7,467 --------- --------- -------- Net cash outflow from capital expenditure (327) (105) (1,377) --------- --------- -------- Equity dividends paid (498) (500) (997) --------- --------- -------- Net cash inflow/(outflow) before financing (255) 359 (1,415) Financing Purchase of own shares (19) (15) (54) --------- --------- -------- Net cash (outflow)/inflow from financing (19) (15) (54) --------- --------- -------- (Decrease)/Increase in cash 2 (274) 344 (1,469) --------- --------- -------- Notes to the cash flow statement: 1 Cash inflow/(outflow) from operating activities and returns on investments Return/(loss) on ordinary activities before taxation 81 (733) (2,695) Loss on investments 189 852 3,173 Decrease in other debtors 346 899 701 (Decrease)/Increase in other creditors (46) 56 (109) --------- --------- -------- Net cash inflow/(outflow) from operating activities 570 1,074 1,070 --------- --------- -------- 2 Analysis of net funds Beginning of period 556 2,025 2,025 Net cash inflow (274) 344 (1,469) --------- --------- -------- End of period 282 2,369 556 --------- --------- -------- SUMMARY OF INVESTMENT PORTFOLIO as at 30 September 2012 Unrealised % of gain/(loss) portfolio Cost Valuation in period by value GBP'000 GBP'000 GBP'000 Qualifying investments Tramps Night Club Limited* 1,224 1,346 60 9.6% Antelope Pub Company Limited* 1,050 1,106 - 7.9% Quadrate Catering Limited 887 887 - 6.3% Quadrate Spa Limited* 873 873 - 6.2% Rostima Limited* 866 696 (170) 5.0% Data Centre Response Limited 607 607 - 4.3% Redmed Limited* 562 562 - 4.0% Residential PV Trading Limited 500 500 - 3.6% Future Biogas (Reepham Road) Limited 499 499 - 3.6% Tracsis plc* ** 161 470 221 3.4% Accumuli Plc* ** 250 404 (19) 2.9% Domestic Solar Limited 400 400 - 2.8% Mosaic Spa and Health Club (Shrewsbury) 400 400 - 2.8% Limited* Slopingtactic Limited 380 380 - 2.7% The 3D Pub Co Limited 517 362 - 2.6% Mosaic Spa and Health clubs Limited* 350 350 - 2.5% Alpha Schools (Holdings) Limited 333 346 12 2.4% Camandale Limited* 1,199 328 (90) 2.3% Angel Solar Limited 250 250 - 1.8% Chapel Street Food and Beverage Limited 250 250 - 1.8% Chapel Street Services Limited 250 250 - 1.8% Helcim Group Limited* 2,017 211 (235) 1.5% Ridgeway Pub Company Limited 136 136 - 1.0% EPI Service Limited* 920 107 - 0.8% --------------------------------------- 14,881 11,720 (221) 83.6% --------------------------------------- Non-qualifying investments Retallack Surfpods Limited 500 500 - 3.6% Fenkle Street LLP 346 346 - 2.5% Liverpool (Nurseries) Holdings Limited 339 339 - 2.4% Kidspace Adventures Holdings Limited 300 300 - 2.1% Baron House Developments LLP 200 200 - 1.4% Kidspace Adventures Limited 200 200 - 1.4% Commercial Street Hotel Limited 115 115 - 0.8% Chapel Street Hotel Limited 10 10 - 0.1% --------------------------------------- 2,010 2,010 - 14.3% --------------------------------------- -------- ------------- Total 16,891 13,730 (221) 97.9% -------- ------------- Cash at bank and in hand 282 2.1% ----------- ---------- Total investments 14,012 100.0% ----------- ---------- * partly non-qualifying ** quoted on AIM SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 30 September 2012 Additions GBP'000 Qualifying investments Helcim Group Limited* 235 Rostima Limited* 35 Quadrate Spa Limited* 34 Tracsis plc* ** 1 -------- 305 Non-qualifying investments Liverpool (Nurseries) Holdings Ltd 339 Baron House Developments LLP 200 -------- 539 -------- Total 844 -------- Disposals Total Market Gain realised value at Disposal against gain in Cost 01/04/12 proceeds cost period GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Qualifying investments Tramps Night Club Limited* 79 79 79 - - Tracsis plc* 40 62 94 54 32 Residential PV Trading Limited* 33 33 33 - - EPI Service Limited* 60 14 14 (46) - ----------------------------------------- 212 188 220 8 32 Non-qualifying investments Liverpool Nurseries (House) Ltd 148 148 148 - - Liverpool Nurseries (Greenbank) Limited 100 100 100 - - Liverpool Nurseries (Cottage) Ltd 49 49 49 - - ----------------------------------------- 297 297 297 - - ----------------------------------------- Total 509 485 517 8 32 ----------------------------------------- * partly non-qualifying ** quoted on AIM NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The unaudited half-yearly results cover the six months to 30 September 2012 and have been prepared in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" revised January 2009 ("SORP") and in accordance with the accounting policies set out in the statutory accounts for the period ended 31 March 2012, which were prepared under UK Generally Accepted Accounting Practice ("UK GAAP"). 2. All revenue and capital items in the Income Statement derive from continuing operations. 3. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits. 4. The comparative figures are in respect of the six month period ended 30 September 2011 and the year ended 31 March 2012 respectively. 5. Net asset value per share has been calculated on 19,906,708 Ordinary Shares and 29,918,670 'A' Shares, being the number of shares in issue at the period end. 6. Return per share has been calculated on 19,816,909 Ordinary Shares and 29,933,494 'A' Shares, being the weighted average number of shares during the period. 7. Dividends Six months ended Period ended 30 September 2012 31 March 2012 Per share Revenue Capital Total Total pence GBP'000 GBP'000 GBP'000 GBP'000 Paid in year 2012 Final 2.5p 99 399 498 - 2012 Interim 2.5p - - - 498 2011 Final 2.5p - - - 499 ----------- ----------- --------- ------------ 99 399 498 997 ----------- ----------- --------- ------------ No dividends have been paid or declared in respect of the 'A' Shares. 8. Reserves Capital Special Revaluation reserve Revenue reserve reserve - realised reserve GBP'000 GBP'000 GBP'000 GBP'000 At 1 April 2012 17,204 (2,964) - 117 Realised gain on investments - - 32 - Unrealised loss on investments - (221) - - Purchase of own shares (18) - - - Expenses capitalised - - - - Transfer between reserves (445) 24 421 - Dividends paid - - (399) (99) Retained revenue - - - 197 --------- ----------- ------------ -------- At 30 September 2012 16,741 (3,161) 54 215 --------- ----------- ------------ -------- The Revenue reserve, Special reserve and Capital reserve - realised are distributable reserves. The Revaluation reserve includes losses of GBP3,816,000 which are included in the calculation of distributable reserves. Distributable reserves at 30 September 2012 were GBP13,194,000. 9. The unaudited condensed financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the period ended 31 March 2012 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the Auditor's report on those financial statements was unqualified. 10. The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with the "Statement: Half- Yearly Financial Reports" issued by the UK Accounting Standards Board and the half-yearly financial report includes a fair review of the information required by: a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so. 11. Risks and uncertainties Under the Disclosure and Transparency Directive, the Board is required, in the Company's half-yearly results, to report on principal risks and uncertainties facing the Company over the remainder of the financial year. The Board concluded that the key risks facing the Company over the remainder of the financial period are as follows: (i) Compliance risk of failure to maintain approval as a VCT; and (ii) Investment risk associated with investing in small and immature businesses. The Company's compliance with the VCT regulations is continually monitored by the Manager, who reports regularly to the Board on the current position. The Company has also appointed PricewaterhouseCoopers to provide regular reviews and advice in this area. In order to make VCT qualifying investments, the Company has to invest in small businesses which are often immature. It also has a limited period in which it must invest the majority of its funds. The Manager follows a rigorous process in vetting and careful structuring of new investments, including taking a charge over the assets of the business wherever possible and, after an investment is made, closely monitoring the business. The Board is satisfied that these approaches provide satisfactory management of the key risks. 12. Going concern The Directors have reviewed the Company's financial resources at the period end and conclude that the Company is well placed to manage its business risks. The Board confirms that it is satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the Board believes that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements. 13. Copies of the unaudited half-yearly report will be sent to Shareholders shortly. Further copies can be obtained from the Company's Registered Office or will be available for download from www.downing.co.uk This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Downing Absolute Income VCT 2 Plc via Thomson Reuters ONE [HUG#1661744]
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